By now, we have all had our fill of terms such as “unprecedented,” “fluid,” and “not since 1918.” Clearly, the disruption to the education calendar caused by the COVID-19 pandemic created many challenges for educational institutions, the likes of which have not been experienced in recent history. One of the immediate obstacles was figuring out how the school year would be continued while ensuring the safety of the student body, faculty and staff, while complying with state-mandated closures. In this regard, educational institutions, including independent schools, have proven to be trailblazers. However, more challenges lie ahead and the impact on the school as a whole has never been greater, nor has the opportunity for change and improvement. See our general business article on Preparing for Emergence.
Clearly, the impact of the pandemic has emphasized the need for a documented business continuity plan that is periodically stress-tested and reassessed. As risk management in independent schools continues to evolve, now is a good time to review, update or, in some cases, create the school’s business continuity plan. With the end of the 2019-20 school year and the shift to planning for the next school year, leadership has the benefit of looking in the rearview mirror to leverage lessons learned and make adjustments. They should be asking themselves “How will the School function if……?”, taking a holistic view of the organization.
In closing out the school year, operating budgets faced many obstacles, one of the largest of which was refunds issued to students. As a result, business officers went in search of cost savings and prepared countless versions of cash flow projections to predict the school’s financial position. Many schools benefitted from an inflow of forgivable loan funds available through the Paycheck Protection Program (PPP) while others, facing just as much future uncertainty, elected not to apply or accept the funds and instead tapped into other resources to prepare for the upcoming school year. Facing both reduced available cash flow from cancelled or curtailed summer programs and exponentially increasing reopening costs, schools are reevaluating their endowment spending for the additional funding.
With adversity comes opportunity, starting with building upon the communication protocols put into place during the early part of the pandemic and shut down. Clear communications with both families and employees paved the way for the successful deployment of quickly developed responses, including distance learning platforms. Moving forward, ongoing discussions about reopening campus and related protocols should involve the faculty responsible for their execution. Dialogues with parents, students and state officials should also continue to ensure maximum understanding and safety.
One of the benefits of working through cash flow scenarios is the ability to dig deep into the largest of the school’s cash outflows: expenses such as labor, capital expenditures, debt service and vendor agreements. Proactively addressing alternatives, including renegotiating certain agreements dependent upon employee headcount or enrollment, anticipating staffing needs for FY 21 as enrollment figures become clearer, and identifying expenditures which may be best deferred can lead to necessary reductions in cash outflow and help with mitigating lost revenues. Now might also be the time to consider a thorough review of certain endowment funds to assess whether any changes in restrictions may be pursued, which may help with the overall use of an existing or modified spending policy. And don’t overlook the possibility of assistance from foundation grants, which may have become available to assist organizations in need during these times.
The shutdown of in-person instruction also brought with it something else new for educational institutions: a remote work environment. Even though many school employees have had the ability to periodically dial-in from home, most began to consistently work in this fashion for the first time and continue to find this challenging. Limitations in technology and gaps in security were heightened and outdated internal control processes resulted in procedural breakdowns causing significant disruption. Many schools also had no clear guidelines for employee behavior or expectations in a telework environment.
With the benefit of hindsight, leadership can learn from this transition in preparing for the new school year in the event of another shut down. Questions to ask include:
A Teleworking Strategy Assessment to look back at processes, develop a gap assessment, create new policies, and remediate ineffective or outdated ones could position the institution to be better prepared for future interruptions and check off a critical box in the business continuity plan. This is also the time to ensure proper cross-training of employees and to update procedure manuals and job descriptions for increased clarity. And as is well-known, many functions and processes, especially those in the business and advancement/development offices, have remained unchanged for decades. The fact of the matter is being forced into a telework environment has been a good thing in that it forced some necessary changes. As planning continues for the new year, leadership can assess those changes as well as evaluate legacy functions so that efficient and effective controls and processes are implemented that are appropriate for the new normal. A Business Enterprise Review, which considers the interactions of all departments, would assist in ensuring the enhancements fit across departments.
The pandemic has raised great concerns over donor willingness to continue to provide much needed support to educational institutions. Will donors have the resources to continue to fund their pledge payments or make annual fund gifts? Will special events need to be cancelled? A survey by a leading charitable giving institution found that approximately 25% of donors surveyed plan to increase their giving levels while 54% plan to maintain them. Most donors plan to continue to support their favorite charities. This bodes well for independent schools; however, there is work to be done to ensure donors feel engaged with the school, and herein lie some challenges. Keeping staff focused on maintaining and building relationships along with communicating to donors that their investments in the school are justified will be critical.
Much of the role advancement plays is reliant upon face-to-face interactions. This is an area where some schools are channeling their creativity, leveraging technology and reducing costs. Along with regular team video meetings, they are using this time to migrate to a more digital format for communications with donors and alumni. Personal outreach is continuing through the use of video technologies and often includes school leadership where possible. These meetings serve multiple purposes, but most importantly, because they are one-on-one, they emphasize the importance of the school’s relationship with the donor. Impact statements, normally a very large and expensive printing project, have transformed into digital formats sent to donors with personal follow up. Virtual events are being held to communicate impact with the participation of faculty or scholarship recipients. Virtual events are also being held to keep alumni engaged by including school leadership and alumni speakers. With the age of technology and changing donor demographics, schools are also finding ways to accept donations using a variety of applications in order to maximize funding from younger alumni. Treating donors as partners throughout this disruption, rather than just a funding source, is a key step in maintaining and strengthening donor relations.
The uncertainty around exactly how campuses will reopen in the fall will become clearer over the course of the summer months. But for those schools which look at this as a time rich with opportunity, and remain actively engaged with all audiences—students, families, faculty, donors—there is a much better chance at moving forward in a positive way. While the end of the school year was not traditional, schools now have the benefit of some experience and are better equipped to develop a plan for how they eventually emerge.
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